An Analysis on the Impact of the Recession on Working Hours in European Countries

abstract: The impact of the 2008 Great Recession was felt on a global level. While many European countries moved to implement large fiscal adjustments in response to the financial crisis, various other economic consequences were felt, such as inflation, public debt growth, and a decrease in purchasing power. A result from these consequences that typically occur every recession are demand shocks within the employment sector. As firms are put into tight financial positions, employers are forced to make employment decisions to cut costs for long-term sustainability, such as laying off workers, or reducing their working hours. This paper aims to investigate how weekly working hours are impacted by shocks to the economy across European countries. Using the 2008 recession as the basis, an empirical analysis was conducted with panel data for 32 countries over 33 years, with average weekly working hours across four occupational groups as the variable of interest, and various economic indicators such as GDP growth as independent variables. Additionally, countries were split up and grouped based on geographical location to examine potential country and region-specific trends. Over time, there is a decreasing trend in weekly working hours across all observed occupations and countries. This decreasing trend continues during the 2008 recession, but the slope of decrease is not significant relative to the entire time period. However, when dis-aggregated into occupational groups with a distinction between full-time and part-time workers, the trends in working hours are a much more noticeable, both during the recession and over the entire time frame of observation